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Big wait now for tax credit checks

Posted by Scott Van Voorhis January 28, 2010 07:00 AM

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Isn't it just wonderful how the IRS works?

First the taxmen dole out millions in home buyer tax credits to an array of fraudsters. Hundreds put down the names of children, some as young as four, to claim their $8,000 check.

All told, the IRS blew more than $139 million on tax credits for people had yet to buy a home or who never got around to it.

And most could have been stopped with some perfunctory checks.

Now, after a flurry of outrage over all those lost tax dollars, the IRS is cracking down.

But of course, millions of honest home buyers who deserve the credit will pay the penalty, while the fraudsters are laughing all the way to the bank.

Here's what I am worked up about, in short. Home buyers are likely to wait months to get their tax credit checks, according to a slew of recent reports like this one, while the IRS appears to be in slow motion when it comes putting any of those fraudsters in jail.

Let's start with the delay. Hoping to ensure it doesn't get taken a second time around, the IRS is requiring that homebuyer tax credit forms be filed the old fashioned way, on paper and sent by snail mail.

The IRS' big new requirement for screening out the fraudsters is for either a signed closing statement or a certificate of occupancy, if it's a new home. There's also a new form, 5405. It's amazing anyone was allowed to claim the credit previously without such basic documentation.

But apparently even doing this kind of bare bones checking will put a big strain on our nation's tax system. It turns out the IRS won't be able to start processing any homebuyer tax credits until mid-February.

After all, the taxmen need time to reprogram their computers.

After that, it could take months for home buyers to get their checks, compared to just four to six weeks before.

Give me a break.

And what about all the fraudsters?

The IRS assured Congress late last year that it had launched something like 160 investigations. Wow, sounds impressive.

But to date, there has been only one prosecution and one civil action, according to this Texas blogger.

Given how stupid and blatant many of these scams were, that's just pathetic.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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